Rental Market Madness

If you're frustrated by trying to find a place in today's rental market, you're not alone.

IN THE RENT-CONTROLLED Big Apple, where vacancy rates regularly dip below 2 percent, and competition for the city’s apartments verges on all-out warfare, employing a leasing agent to hunt down a rental is about the only way to ensure you score a dream (or at least cockroach-free) apartment. With similarly low vacancy rates here, it was only a matter of time before the practice arrived in Portland. “We’ve found the need and request for rental location service to be increasing as the rental market continues to be competitive,” says Jenelle Isaacson, founder of the fast-growing firm Living Room Realty. So the firm, along with a few others, began offering “relocation services.” For a $500 deposit (applied toward your total fee—one month’s rent once you find an apartment) a Living Room agent will research, preview, and photograph potential properties for you. Goodbye, Craigslist. Hello, home.

The only thing tougherthan buying a home in Portland right now might be trying to rent one. With citywide vacancy rates hovering at or under 3 percent (among the lowest in the nation), “competitive” doesn’t quite do the situation justice. Some tenants are offering larger deposits—or in some cases slightly higher rent—to make themselves more attractive, according to the Community Alliance of Tenants. “The market has been tight because it’s been a long time since anyone’s built rentals,” explains Jerry Johnson, principal at Portland real estate consultancy firm Johnson Reid. Mix in former homeowners out on their keisters after foreclosure with poor prospects for buying another home any time soon, and you’ve got a recipe for a rental market so tight it’s practically vacuum-sealed.

As demand has risen, of course, so have rents—generally about 7 percent a year since 2010, according to Metro Multifamily Housing Association’s fall 2012 apartment report. Some tenants—particularly those in studios—have even seen a 30 percent increase over the past two years. “When some of the jobs started coming back, there was a pent-up shortage of rent increases, and everybody took their jumps as quickly as they could,” says Mark Skelte, owner of Western Realty Advisors. Today, you can expect to pay around $938 for a one-bedroom in the city, although price-per-square-foot rates vary wildly between neighborhoods and new versus older properties. Skelte and others predict rents will continue to increase moderately over the next couple of years, but the increase could slow as many of the current apartment projects being built throughout the city come online. Between 6,000 and 10,000 units are planned or proposed for development in the next year or so, according to the MMHA and Johnson, including about 1,100 affordable housing units backed by the Portland Housing Bureau. Notes Johnson: “They’ll build until rents stop increasing and vacancy gets up over 5 percent.”

Vacancy and rent information courtesy of Norris, Beggs & Simpson’s Fourth Quarter 2012 Multifamily Report. Vice president Robert Black notes that fourth quarter vacancy rates tend to be higher than the rest of the year since few people move in the winter. He also points out that the seasoned rental rates reflect a wide range of properties and accompanying rates. For instance, the older rentals east of 82nd Avenue generally maintain rates lower than buildings of the same age in a more close-in location.